In last Tuesday’s Mais lecture, the Chancellor laid out economic measures designed to stimulate economic growth for the UK, one of which being a willingness to align further with the EU single market when beneficial to the UK. This follows a May 2025 package of measures to reduce red tape across a range of industries which analysts estimate could add nearly £9 billion to the UK economy by 2040. While these measures effect industry segments across the UK economy, measures for financial services, which account for nearly a tenth of UK economic output, are largely absent. As recently as January this year, Prime Minister Keir Starmer ruled out including financial services in wider alignment talks and instead, cooperation has been channelled through the Joint EU-UK Financial Regulatory Forum, which meets semi-annually to discuss policy priorities, digital finance, market reform and sustainable finance. That dialogue is valuable, but it is not the same as market access, and it is hurting UK growth ambitions. The UK is the epicentre of fintech innovation thanks in part to its world class universities, talent pool, and access to capital markets. Yet when it comes to international expansion, fintechs like the one I co-founded are hampered by a lack of market integration that forces them to invest elsewhere in both capital, jobs and technology in order to expand. You can see that in the behaviour of the fintechs themselves. Late last year we announced an intention to acquire Lithuania’s Fjord Bank as an important step to securing an EU bank licence, establishing an authorised foothold in Europe to enable the roll out of products and services more easily. Other firms have taken similar approaches. Revolut opened a bank in Lithuania in 2020 and has since invested in a Paris headquarters, while Monzo has expanded into Europe via an Irish base. Rather than scaling from the UK, fintechs are choosing to invest in EU subsidiaries as part of their growth strategy. EU member states are benefiting from that investment. Ireland’s Central Bank says the number of authorised payment and e-money firms has tripled in seven years, with passporting a significant feature of that growth. Lithuania now hosts 282 fintechs serving more than 30 million customers. At the same time, the EU has extended clearing equivalence while continuing to encourage more activity to take place inside the bloc. The House of Commons Foreign Affairs Committee has also highlighted the lack of a clear roadmap for financial services within the wider UK-EU reset. That does not mean there is no path forward. But it does suggest there may be a case for exploring practical ways to improve access while respecting political realities on both sides. Rather than framing the issue as a binary choice between full single market participation and continued divergence, policymakers could consider more targeted mechanisms. One option is a more limited form of mutual recognition, sometimes described as a “passport-lite” arrangement, allowing firms to operate cross-border in defined areas without having to recreate full subsidiaries in every market. Another is a joint UK-EU regulatory sandbox, helping innovative firms develop products with both jurisdictions in mind from the outset. A third possibility is a more structured branches regime for certain regulated activities. None of these ideas would recreate passporting in full, but they could help reduce duplication, lower barriers to growth and support closer regulatory understanding. They would also enable fintechs to expand from the UK, roll out products Europe-wide, all without having to invest capital and create jobs outside of the UK. Equally this would allow Eu firms to launch in the UK and create more competition for local firms and better outcomes for consumers here too. Building closer ties with the EU reset also presents opportunity in the AI era, another priority for the government with £2.5bn funding announced on Tuesday. When regulation and innovation work hand-in-hand, everyone stands to benefit from a stronger financial ecosystem. As AI makes building technology faster and cheaper, the real differentiator in fintech is increasingly regulatory: licences, compliance and the trust required to operate within the financial system. Proactive regulatory capability is quickly becoming a defining advantage for the next generation of financial platforms. UK fintechs are genuinely world-leading and entrepreneurial, and are redefining the way that people interact with financial services. A more practical and proportionate framework could make it easier for the UK to help fintechs to expand into Europe, help maintain access to competitive British services for EU consumers and show that sovereignty and cooperation do not have to be in conflict. London will remain a global financial centre, but a more creative middle path could help ensure the ...